March Sadness

Confession.

I’m a perma-optimist by nature.

I love when the market goes up.
I love seeing people succeed.
And the reality is: when we’re in an uptrend, that tends to happen a lot more often.

So yeah, I root for the market to go up.

Now, I get it, we shouldn’t let bias override analysis.
But I’m not going to lie and pretend I don’t have a bias.
I want the market (and people) to do well.

That’s why I’m here.
Because when price action shifts, I want to help as many people as possible protect what they’ve built.

That’s why I kicked this month off with a note on risk management.

There were signs it needed to be front and center.
And that’s still the case.

Being a perma-optimist, I had the uptrend winning my march madness bracket.

I filled out the bracket with who I wanted to win.
I allocate my money where price tells me to.

And right now?
It’s not on Team Uptrend.
They received an early elimination from the tournament.

If you’ve been following my work, it really shouldn’t be a surprise.

I’ve been pounding the table: risk management needed to lead.

Breadth was weak. Sector rotation was suspect. The biggest components were lagging.

That was all the evidence we needed to stay cautious.

You guys have seen this chart time and time again.
Until price turns around, it’s hard to put money on losing team.

Ball don’t lie.
And neither does price.

Sure, we get false breakouts and breakdowns but that’s part of the game.
The underlying trend though usually tells us what we should, and shouldn’t, care about.

For most of this bull market, we’ve held above the 200-day.
To keep it simple, we’ll call that the primary trend.

And during that stretch?
You could doubt your doubts.
Oversold meant opportunity.
Bullish breakouts were sticking.
Bearish ones were failing.

But as the saying goes: “Nothing good happens below the 200-day.”

Why?

Because when we’re below it, price is telling us the trend might be changing and the concerns we brushed off earlier now deserve our attention.

Now?

The bears have control.

• Price is below the 200-day and that key $560 level.

• RSI is under 50, momentum’s in the bears’ court.

• ADX is above 20, with -DI > +DI confirming bears control the trend.

At this point, it’s hard not to call it a bear market.

Maybe that’s just the optimist in me holding back.
But it’s also why risk management stays the priority.

If the market turns — I’ll be here.
If it keeps breaking down — I’ll still be here.

Either way, we keep navigating.
And when opportunity shows up, we’ll be ready to express it.

The market’s a mess, and I know a lot of people want to see some trades.

So here’s the deal.

Make sure to keep an eye out for my new column: Thompson’s Two Cents.
I’ll be dropping my two cents every Tuesday and Thursday.

Because while the U.S. stock market is struggling, there are pockets of strength around the world and in this kind of tape, smart allocation makes all the difference.

I’ll also be sharing ideas on Twitter and StockTwits, so if you to see more of my trades, you know where to find me.

Cheers,

Larry Thompson, CMT CPA

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